Attorney Matt Campbell outlines how the Work Opportunity Tax Credit (WOTC) can benefit companies that employ rural employees. The expanded $2,400 tax credit per new-hire eligible worker is frequently overlooked and was expanded in recent years to benefit employers that have new hires in designated rural renewal counties. Many counties in Northwest and Southwest Iowa qualify.
For many years, federal tax law has provided employers with a tax credit for hiring disadvantaged workers such as unemployed and/or qualified veterans, those that qualify for food stamps or SSI recipients. The credit is significant – generally, a maximum of $2,400 for each eligible employee that is hired (a credit of 40 percent of the first $6,000 of wages paid to an eligible employee that works at least 400 hours during the first year of employment).
The Small Business and Work Opportunity Act of 2007 (the Act”) amends the WOTC to expand its availability to businesses in rural communities that hire a “designated community resident.” That’s a person who is at least 18 years of age, but under age 40 as of the date they are hired and who has their principal place of residence established in a “rural renewal” area.
Note, the credit is available depending on where the new hire employee lives and is not based on the location of the employer. Accordingly, an employer that has a new hire employee that lives in a rural renewal country and that commutes to work as many Midwestern workers do these days would be eligible for the credit.
- Read the complete article to learn more about your company’s eligibility for the tax credit.
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